ISLAMABAD, Jan 31: Pakistan has sought additional soft-term loan facility from the World Bank for its infrastructure development and poverty alleviation efforts through a long-term development partnership to transform the country and facilitate second generation reforms.
The request for more support through enhanced soft-term loan was made on Monday by Prime Minister Shaukat Aziz in his meeting with a 10-member WB delegation comprising its regional executive directors.
The delegation started here on Monday its five-day visit to discuss Pakistan's future funding requirements ahead of next week's visit to Islamabad of the bank's president James D. Wolfensohn.
The prime minister "underscored the need for the World Bank and Pakistan to enter into a long-term development partnership for transforming the country", an official statement said.
Describing the bank's role as critical in the country's development, Mr Aziz noted that a long-term relationship could really transform the country. "If the country is provided the soft loans facility (IDA) by the bank, it could further accelerate the process of economic development.
To cater for funding requirements for the development of social sectors, Pakistan needs enhanced IDA allocation consistent with its performance," the statement quoted the prime minister as telling the WB team.
The delegation is here to deepen its understanding of Pakistan's reforms programme and the economic challenges facing it. It will assess the World Bank's role in assisting Pakistan and get direct feedback about its performance and contribution to the success of the reforms programme.
The prime minister said that wide-ranging structural reforms, prudent macroeconomic policies, strict financial discipline and consistency and continuity of policies "have transformed Pakistan into a resurgent economy".
He identified key areas for World Bank's support and hoped that it would participate in investment in sectors like infrastructure development, water resource development and power sector development.
The delegation also held discussions with Adviser to Prime Minister on Finance and Revenue Dr Salman Shah regarding domestic support for the reforms agenda, taxation reforms, issues related to SMEs, micro-financing, agricultural finance, devolution of power to local governments, infrastructure development, Pakistan's plans for further enhancing social sector expenditures and its exit from the PRGF programme.
The World Bank was informed that the "painful" adjustments period for the country had passed and now the people could benefit from the gains of the reforms programme.
The country could now expect greater fiscal space through fiscal prudence and efficient expenditure management, increased tax to GDP ratio and expanding the role of private partnerships for infrastructure projects.
Dr Salman Shah told the World Bank team that the economic reforms introduced by the government during the last five years had laid a strong foundation for high levels of sustained growth and the poverty reduction strategy adopted by the government was yielding positive results.
However, the government needed more support from the World Bank for its development effort and poverty reduction strategy, he said. By prudent and disciplined management, the external debt has reached comfortable levels and rating upgrades are a testament to the progress achieved, he added.
The World Bank was also briefed about the macro-economic challenges and the progress made in this regard during the last five years. Dr Salman Shah said real GDP was maintaining a robust upward trend, foreign investment had started to recover, budgetary position had improved, growing tax collection had helped meet fiscal deficit targets, overall debt servicing ratios had improved, and there was a continuing downward trend in public debt.
The World Bank delegation said Pakistan's performance and economic recovery during the last five years "has been impressive". It also praised Pakistan for creating the fiscal space required to facilitate the second-generation reforms.
Mr Shah also informed the delegation that the government was working on adopting more innovative ways to generate resources to fund critical social sector projects.
The economy was being further deregulated and the privatization programme was being accelerated to give a central role to the private sector in achieving growth targets, he said.
The World Bank delegation comprised Sid Ahmed Dib, Executive Director (ED)-Algeria, C.M. Vasudev, ED-India, Tom Scholar, ED-United Kingdom, Pietro Veglio, ED-Switzerland, Ad Melkert, ED-Netherlands, Terry O. Brien, Alternate ED, Jorge Familiar, Alternate ED, Mexico, Anthony Requin, Alternate ED, France, Tanwir Ali Agha, Alternate ED-Pakistan, Leonard Msceka, Senior Board Operations Officer and John Wall, Country Director.